Acer, Asus Not Exiting the PC Market, Executives Say

Acer's founder and Asus' CEO respond to an IDC analyst's prediction that two PC vendors among the top 10 will drop out.

Acer and Asus have no plans to get out of the shrinking, highly competitive PC market, according to executives for both companies.
Acer founder Stan Shih told journalists in Taiwan Nov. 12 that while the company, which is the world's fifth largest PC maker, is facing continued competition and internal efforts to restructure, officials are determined to make the PC business leaner and more efficient.
"Acer will not by any means exit from the market," Shih said, according to a report in The China Post.
The Acer founder's comment came two days after Asus CEO Jerry Shen told investors at a conference that his company also intended to stay in the PC market. According to numbers from market research firm Gartner, Asus was in sixth place in global PC space in the third quarter, with 7.1 percent of the market. By comparison, Acer held 7.4 percent, Gartner analyst found.

Both officials were responding to a prediction made earlier in the month by IDC analyst Tom Mainelli, who said that he expects the PC market to consolidate over the next two years. The top four vendors—Lenovo, HP Inc., Dell and Apple—will continue to grow share, Mainelli said as part of the analyst firm's annual tech industry forecast.

However, two of the next six vendors—which would be Acer, Asus, Toshiba, Samsung, Tsinghua TongFang and Fujitsu—would drop out of the market.
"The most likely scenario is that two will simply leave the market," Mainelli said, according to Investor's Business Daily. "I don't expect there to be many acquisitions as the [top four] don't gain much from buying anybody in the bottom half of the list. There will likely be much discussion about possible mergers among the rest, but I'm not sure that this course of action will play out."
According to Gartner and IDC, in the third quarter, the top four PC makers held between 60.2 percent and 72.4 percent of the market.
Mainelli hasn't been the only one in the industry to suggest further consolidation in the PC space. Dell CEO Michael Dell said in September that Lenovo, HP Inc. and his company would continue grabbing market share, possibly growing it to as much as 80 percent in the next five to seven years.
The PC market has seen the number of shipments decline steadily since 2011, when consumers and business users turned their attention and dollars to other devices, in particular smartphones and tablets. The industry saw the bleeding slow a bit last year when Microsoft ended support for the aged Windows XP operating system, forcing many businesses to make the move to Windows 7 or 8.
However, the decline as since accelerated, with Gartner and IDC analysts saying the number of shipments worldwide in the third quarter fell between 7.7 percent and 10.8 percent over the same period last year.
Analysts expect the decline to slow next year as new systems and form factors arrive armed with Microsoft's Windows 10 OS and powered by Intel's new "Skylake" Core processors.
The struggles of the market have shaken PC and component makers, convincing them to extend their reach into other growth areas. They also have helped drive two of the largest vendors to take on opposing strategies. HP earlier this month split in two, separating its PC and enterprise IT businesses. Dell officials say their PC business is a core part of their overall IT solutions and services business.
There have been some companies that have dropped out of the business, including Sony early in 2014 selling its Vaio unit, with officials saying they instead would focus on smartphones and tablets.
That's not the direction Acer or Asus is going, the executives said. Acer's Shih said there have been delays in Acer's restructuring efforts, but that the work was continuing. He said he expects the PC unit will streamline in several ways, including through attrition in the workforce.